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Amplats delivers solid H1 results in face of the pandemic

Amplats delivers solid H1 results in face of the pandemic
Amplats’ headline earnings declined 7% to almost R6.9-billion, from which an interim dividend of R2.8-billion will be paid out to shareholders.(Photo: EPA / Kim Ludbrook)

South Africa’s platinum sector, which was battered and bleeding cash just a few years ago, remains resilient even in the face of Covid-19. Anglo American Platinum (Amplats), has delivered a solid set of interim results and managed to pay workers who stayed at home because of the lockdown.

Anglo American is still reaping the rewards of a pivot to mechanisation and modernisation that has been underpinned recently by surging prices. The results it unveiled were for the six months to the end of June – a very long six months indeed. The period began with the Covid-19 pandemic largely confined to Wuhan, China, and ended with South Africa and much of the world under lockdown.

Amplats was able to maintain some operations, notably its open-pit cash-spinner Mogalakwena in Limpopo, producing even during the hard lockdown in April. Still, the measures to contain the pandemic in South Africa and Zimbabwe had a material impact on production, which declined by 585,000 ounces or 25%.

Such a significant loss of production could tip a mining company into the red, but prices early in 2020 for platinum group metals (PGMs) such as palladium and rhodium, used as catalysts in petrol engines, were red hot. The rand basket price per PGM ounce in the period rose 80%, and so net sales revenue climbed 28% despite the production setbacks. Amplats is indeed leading a charmed existence.

The bottom line: the company’s headline earnings declined 7% to almost R6.9-billion, from which an interim dividend of R2.8-billion will be paid out to shareholders. The company also paid out R1.2-billion in wages to workers who were forced to stay at home because of lockdown regulations, and more money will still flow to idled workers. That goes a long way toward keeping good labour and social relations, always a potential flashpoint in the South African mining sector. Amplats is able to do so because of a solid balance sheet that at the end of June had net cash of R11.3-billion compared to R6-billion last year.

On the safety front, the company went 620 straight days until the end of June without a fatality at its own-managed operations, a huge milestone for a company that just a few years ago had serious safety issues.

The company remains committed to technological improvements such as digitisation as it takes mining to new levels in the 21st century.

“Our focus is on implementing technological improvements and innovation across our operations,” said new CEO Natascha Viljoen, who took over from Chris Griffith earlier this year. “I want our operations to run like a Swiss watch.” DM/BM

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